Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

As of December 31, 2016 and December 31, 2015, the following financial assets and liabilities are measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).



(In millions)	Carrying value and fair value
As of December 31, 2016	Total		Level 1		Level 2		Level 3
Financial assets:
Marketable equity securities	$	65.8	$	65.8	$	—	$	—
Marketable debt securities	15.5		3.6		11.9		—
Contingent consideration receivable	15.6		—		—		15.6
Derivative contracts	18.0		—		18.0		—
Total	114.9		69.4		29.9		15.6

Financial liabilities:
Derivative contracts	8.3		—		8.3		—
Contingent consideration payable	1,058.0		—		—		1,058.0
Total	$	1,066.3	$	—	$	8.3	$	1,058.0



(In millions)	Carrying value and fair value
As of December 31, 2015	Total		Level 1		Level 2		Level 3
Financial assets:
Marketable equity securities	$	17.2	$	17.2	$	—	$	—
Contingent consideration receivable	13.8		—		—		13.8
Derivative contracts	1.9		—		1.9		—
Total	32.9		17.2		1.9		13.8

Financial liabilities:
Derivative contracts	11.5		—		11.5		—
Contingent consideration payable	475.9		—		—		475.9
Total	$	487.4	$	—	$	11.5	$	475.9

Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The following table provides a roll forward of the fair values of our contingent consideration receivable and payables which include Level 3 measurements:



Contingent consideration receivable
(In millions)	2016		2015
Balance at January 1,	$	13.8	$	15.9
Change in fair value included in earnings	1.6		13.6
Other	0.2		(15.7		)
Balance at December 31,	$	15.6	$	13.8

Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)



Contingent consideration payable
(In millions)	2016		2015
Balance at January 1,	$	475.9	$	629.9
Additions	565.4		92.8
Change in fair value included in earnings	11.1		(149.9		)
Other	5.6		(96.9		)
Balance at December 31,	$	1,058.0	$	475.9

Fair Value Inputs, Assets Quantitative Information Table

Quantitative information about the Company’s recurring Level 3 fair value measurements is included below:



Financial assets:	Fair value at the measurement date
As of December 31, 2016
(In millions, except %)	Fair value		Valuation technique	Significant unobservable inputs	Range
Contingent consideration receivable ("CCR")	$	15.6	Income approach (probability weighted discounted cash flow)	Probability weightings applied to different sales scenarios	10 to 90%
				Future forecast consideration receivable based on contractual terms with purchaser	$0 to $21 million
				Assumed market participant discount rate	8%

Fair Value Measurements, Nonrecurring

The carrying amounts and estimated fair values of the Company’s financial assets and liabilities are as follows:



	December 31, 2016				December 31, 2015
(In millions)	Carrying amount		Fair value		Carrying amount		Fair value
Financial liabilities:
Senior Notes	$	12,039.2	$	11,633.8	$	—	$	—
Baxalta Notes	5,063.6		5,066.5		—		—
Capital lease obligation	353.6		353.6		13.4		13.4

Fair Value Inputs, Liabilities Quantitative Information Table



Financial liabilities:	Fair value at the measurement Date
As of December 31, 2016
(In millions, except %)	Fair value		Valuation technique	Significant unobservable inputs	Range
Contingent consideration payable	$	1,058.0	Income approach (probability weighted discounted cash flow)	Cumulative probability of milestones being achieved	6 to 90%
				Assumed market participant discount rate	1.2 to 10.5%
				Periods in which milestones are expected to be achieved	2017 to 2040
				Forecast quarterly royalties payable on net sales of relevant products	$0.1 to $7.5 million